Global Luxury Retail

Retail Science from CBRE

Is luxury immune to the GLOBAL twists and turns LUXURY RETAIL: of the global economy?

A DIVERGENT Luxury proﬁling A close up on Lagos, MARKET New York and Mumbai

Luxury retailing Vital statistics

2015 CBRE Research “Consumer Focus - luxury consumers of the future” in collaboration with:

A small international community of luxury consumers and fashion sector inﬂuencers created by We Are (The Collective). Exploring how the next generation of digitally-connected customers will be making their purchases. we-are.co

Project / Community Title: Luxury Consumers of the Future URL: future.editsloanestreet.com CONTENTS —03 Introduction —04 Sector overview – Is luxury immune to changes in the economy? —14 Consumer focus – Luxury consumers of the future —33 Luxury proﬁling – A global perspective: close up on Lagos, New York and Mumbai —41 Retailers’ performance —48 Conclusion – The future of luxury retail —53 Key contacts Introduction

INTRO DUCTION

The world of luxury continues to Whilst looking at individual markets The conclusion of the ﬁndings has to fascinate and intrigue. The brand is important, it would be remiss not to relate back to where retailers are looking names synonymous with luxury consider the wider global implications for to expand; target markets are changing shout out to us from many locations luxury. As an industry that has, to a great as the penetration of luxury in established around the world. extent, been immune from the chill wind markets reaches maturation. The new blowing across other parts of the economy, markets require distinct strategies as CBRE has invested in research to get we wanted to understand why that might consumer requirements differ between beneath the surface of luxury in three be and what the future might look like. countries and there is a divergence in traditional cities across Europe: London, how retailers choose to go to market in Paris and Milan. They are recognised as One of the great challenges is in forecasting new countries; some choose the franchise leading the way in terms of brand heritage the dynamics within the Chinese consumer route and work with local partners, whilst and retailer presence, and the time spent market; as spend from China now makes others want to own every element of their with the consumers of luxury in these cities up more than a third of total global spend brand. There is no ‘one’ answer, the correct provides a fascinating insight into their lives, on luxury, a full understanding is critical. method very much depends on the brand expectations and experience. The fact that the Chinese consumer prefers and on the market being expanded into. to shop overseas is the factor that has To expand the view of luxury we also major implications for the scale of brands’ As more people aspire to engage with engaged our market experts in New store estates in China. We explore what luxury brands, the topic of luxury will York, Mumbai and Lagos. With these the changes in the global economy mean remain high on many developers, investors three snapshots we chose to look at an for luxury brands. and, of course, retailers’ agendas. An in established market, a developing one depth understanding of how consumers and a market for the future, to give you engage is absolutely key and the approach a view as to the presence of and future taken in one market may not necessarily potential for luxury brands. be appropriate for another: luxury is unique and requires a unique approach.

The luxury economy had, until recently, “ The Chinese consumer seemed immune to the vagaries of is now responsible global events. The overall downturn in consumer conﬁdence in some markets for over 30% of global and the slowing economies in others did not have an adverse impact on luxury purchases.” luxury spend; this lack of causal eﬀect has changed quite dramatically in the past few months.

The ﬂuctuations seen in the Chinese ﬁnancial markets have created a ripple effect. Uncertainty as to what the downturn actually means has led to a fall in the share price of a number of established international fashion houses, and a belief that the economy in China is slowing has caused many institutions to review their own positions. Whilst the forecast Chinese GDP growth remains at a level that would be the envy of most western countries, it is lower than originally expected.

IMMUNE IMMUNE TO IN IN THE ECONOMY? IS IS LUXURY CHANGES

The Chinese consumer is now responsible for over 30% of global luxury purchases. According to a Bain & Company report in 2015, Chinese people consumed US$75 billion of luxury products in 2014, but around 70% of their spend took place overseas.

In absolute terms, Asia has the highest number of luxury brand outlets in the world; between 2008 and 2011 we saw a 42% increase in the number of stores in Asia, compared to 28% in Europe and 5% in America, according to Boston Consulting Group. The growth in store openings that has been seen over the past ﬁve years is, however, slowing.

A number of brands are reviewing their store portfolios to ensure that they have the rights stores in the right locations. In terms of net growth over the next year, we are unlikely to see dramatic spikes in the number of stores opened; there is a growing recognition that luxury retailers have focused too much on the numbers of stores on the ground. The development of new layouts and design of stores, superb levels of service as well as an integrated online element will become increasingly more important.

“ The heritage and authenticity of luxury products is extremely important.”

Any change in the dynamics that impact Luxury brands have differing price tiers This, however, does not help the luxury the luxury consumer creates a state of depending on the region in question. goods brands in their attempts to increase nervousness across the industry. Many China has been considered an immature sales in the Chinese market. brands now recognise they expanded too market, with a resultant high price point. quickly into the Chinese market, drawn Complaints that the price differential A further change that has been seen in the by a belief – not fully materialised – that could be as high as 70% has seen many Chinese market is the Government ’anti- increased personal wealth would drive consumers converting their Yuan to British extravagance‘ legislation. In essence, this is sales of luxury products within China. Pounds, US Dollars or Euros and making aimed at reducing the purchasing of luxury their purchases overseas, where the prices items as ‘gifts’ for officials and business The fact is that Chinese consumers prefer are more attractive.There is a certain status associates. This has had an impact on the to shop for luxury products whilst abroad, afforded to a purchase of a Prada bag in number of purchases being made and there a preference that has been recognised Milan as opposed to Shanghai. is now more focus on items for personal use by the Government in the UK: Visas The heritage and authenticity of luxury as opposed to being purchased as gifts. for Chinese visitors are now easier and products is extremely important. cheaper to obtain; a visiting family of four Whilst the aforementioned authenticity of would make a potential saving of almost Earlier this year many famous brands the products is of course important, the £1,000. Even those customers who do not reduced their prices in order to stem the price of the product is also critical to many. physically travel outside of China can take flow of money leaving China. The timing The growth in importance of outlet designer advantage of third party sellers that will of this was unfortunate as any benefit that villages has brought luxury products to a make the purchase on their behalf: these had been hoped for was limited by the wider audience. ‘daigou’ circumnavigate the high import devaluation of the Yuan in August. Despite duties and deliver authentic products. this catching the global market by surprise, the reasons for the devaluation are in line with market fundamentals (slower overall growth in China and a stronger US$).

Case study Bicester village

Bicester Village in the UK now attracts 6.3 million visitors a year looking for brands such as Balenciaga, Prada and Céline. Chinese visitors in particular seem to be attracted to Bicester, with it now being the second most visited ‘tourist attraction’ for them after Buckingham Palace. Three in four visitors to the UK from China visit Bicester Village. A combination of a Mandarin signposted train service from London’s Marylebone station and 10,000 tour buses a year disgorging the shoppers to stock up on luxury brands. A new train station, called Bicester Village, opened on the 26th October this year; it is the ﬁrst new railway line to link London to another British city for 100 years.

It will be interesting to see the impact on Bicester Village once a similar luxury outlet destination opens in Shanghai next year. Will the prices be at levels attractive enough to persuade Chinese consumers to spend their money within China? The site is in the same location as Disney Resort Shanghai and is anticipated to become ‘one of the most important luxury destinations in Asia.’ With 50,000 sq m of outlet and restaurant space it intends to service the anticipated 15 million visitors a year from both local and overseas locations.

The European and American markets are The spreading affluence brings increased viewed as the most important for luxury access to the world of luxury products: “ The appeal of a brands over the coming five years. There is many product lines from key brands are luxury brand is in now a clear understanding that much of the within reach of people who would not luxury spend in these markets comes from recognise themselves as being part of its ability to convince overseas visitors. Alongside the Chinese the luxury elite. The brand extension into consumer, Nigerian, Middle Eastern and tertiary product lines such as sunglasses, you of the need to nascent Indian lovers of luxury contribute make-up and entry point accessories has greatly to the overall spend. democratised the luxury market. This does make a purchase.” not detract from the overall appeal of a There is an appetite to expand to new brand; it is a teaser, a taste of what might markets and to reduce the overall share be available to a consumer should their of global store numbers currently seen in income continue to increase. the Asian market. The embryonic African and Indian luxury markets are of course The appeal of a luxury brand is in its ability of interest, however, there is perhaps to convince you of the need to make a more hesitancy being shown in opening purchase. The suggestion that a product is new stores as a result of the large store a ‘wise investment’ does not go unnoticed. portfolios now being reduced in China. Luxury products from the automotive and As individual affluence increases, there wine categories have seen an increase in is a great appetite for travel and many value over the past decade to outperform purchases will be made whilst on visits any global stock market. Whilst an investment to Europe and America. in a handbag may not be as financially astute as those other categories, it is still predicated on the fact that it’s a wise decision.

“ The more aspirational a product is, the more desirable it becomes.”

Although luxury products are available The increasingly number of Ultra High Net As theh growthh in individuald d l wealthl h continues, to all that have the means to make a Worth Individuals (UHNWI) are being well it is important for luxury brands to recognise purchase, there are individuals that crave served by the luxury industry. These 250,000 the requirements of people from different exclusivity. In recognition of this, brands individuals (with personal investable wealth countries. Whilst the majority of UHNWI at the higher end of the luxury spectrum of US$30 million each) have a combined net have homes in three or more cities, they are creating ‘ultra-luxury’ products. Whilst worth of US$30 trillion; although accounting have a view of the world founded in their a luxury handbag can be purchased for for 0.004% of the world’s population, they ‘home’ city. The desire for certain brands £2,000, there are also those brands that hold 13% of global wealth. The World Ultra and products differs and has to be are expanding the £20,000 range of bags. Wealth Report produced by UBS and Wealth-X carefully evaluated. The more aspirational a product is, the suggests that each UHNWI spends in excess more desirable it becomes. of US$1 million a year on luxury goods.

Key takeaways

The opportunity for continued growth in the sale of luxury products is undeniable. However, there are a number of challenges to face:

Understanding the impact of the changes in diﬀerent economies around the world.

— Differing economies develop at different speeds; an assumption that consumers in one market will behave the same as those in another is erroneous. The development of the luxury consumer is formed by experience, access and knowledge. It is paramount for the brands to ensure access to the products in a place that works for the consumer; this may be outside of their home market, as seen with the Chinese consumer.

Ensuring the experience resonates with the consumer and makes them want to continue to engage with the brand.

— Brands need to communicate the DNA of their proposition to the consumer. What is it that makes the brand desirable, why should the consumer buy this brand as opposed to another? Consumers are attracted to different elements; some by authenticity and heritage, others by celebrity endorsement and a number because of exclusivity. Brands need to understand what works for consumers across different markets.

Embracing digital, the appropriate use of online channels to promote and feature the brand has to be increased.

— Consumers are tech savvy; they are looking for information on the products they want to purchase and the ﬁrst place many look is online. If a brand does not have a compelling web presence, they are missing an opportunity to engage with the consumer. The importance of the website tying in with the store, the look and feel of both giving an insight into the brand experience cannot be overestimated: the brand ethos has to ﬂow across all communication channels.

and expectations. and askedabouttheirshiftingattitudes consumers inLondon, Paris andMilan, We gatheredthreegroupsofluxury luxury shoppersinestablishedmarkets? But whataboutthenextgenerationof consumer.affluent andstatus-seeking luxury brands,fromayounger, more led tomanybullishsalespredictionsfor The growthofemergingmarketshas • • • • Key takeaways into themindofluxuryconsumer. Herearesomeof ourfindings. Paris totryandanswersomeofthesequestionsgainbetterinsight among luxuryconsumersinthefashioncapitalsofLondon, Milanand CBRE commissionedWe Are(TheCollective)toconductfocusgroups some ofthequestionswesetouttobetterunderstand.InAutumn2015 authenticity andheritagewhatinspiresbrandloyalty?Theseare goods? Whydotheyengagewithcertainbrands?Howimportantis global economy. Whatdrivesconsumersdecisionstopurchaseluxury Luxury retailingseemsalmostimmunetothetwistsandturnsof buy in-store most prefertolookonline,then than objects service remainsfrontandcentre physical model–butdemandfor Future isacleverblendeddigital/ ‘Reverse showrooming’effect: Experiences aremoreimportant transparency, qualityandmeaning and status,moreabout markets carelessaboutopulence New luxuryconsumersinWestern Luxury consumers ofthefuture – 16 – the experience. who hadveryfondholidaymemories of York andLondon stores,from someone discrepancy inservicebetweenitsNew New York jewellerwascriticisedforthe same brandsathome.Onefamous experiences ofbrandsabroadwiththe more peopletravelandcomparetheir and vulnerability. Thisriskincreasesas factor whichisboththeirgreatestasset criticism, relyingastheydoonthehuman a shopper, alsomoreopento they’re create farmoreemotionalaffinitywith While physicalstoreshavetheabilityto brands weren’t blamed. something wentwrong, theindividual on individualretailersites,andthus,if from manybrandsatonceratherthan brand loyal;theywouldresearchitems was becauseonlinemadethemless locations. Severalattendeesthoughtthis more associatedwithbricksandmortar Overall, theexpectationofservicewas walking intotheshop. been abletogetitrestoredatnocostby had inheritedavintageluxurygoodand – inbothLondon andParis, members attendees hadverypositiveexperiences one London member. However, several said bad oneiswhatyouremember’, have tengoodexperiences,butthat their affinitywiththebrand.“You can experience, andhowthisimpacted was quicktorecountapoorservice three cities,andacrossallagegroups, Without exception,everyattendeeinall of aluxurybrand still thebiggest maker Exceptional service is © 2015 CBRE, Ltd © 2015CBRE, “When I buy a brand and I’m told that customer service will last the life of the product — that is luxury, to me.” Paris

Paris

Less likely to use a personal shopper: felt that knowing your own style was part of the French woman’s identity.

Preferred discreet luxury brands.

Preferred in-store to online purchase.

London

Preferred in-store to online purchase.

Active on Instagram.

Expected luxury brands to innovate, as long as they remained authentic.

Milan

The youngest group of consumers.

Cared about ethics of brand behaviour, not just quality of product.

Knowledge and authenticity seen as key to brand extensions.

Feedback differed between cities when it came to the level of interaction that was expected or desired from sales staff. Several of the women in Paris felt it was a part of their national identity to understand style and what looked good on them – they would therefore be less likely to engage the services of a personal shopper. In London, however, building a relationship with the sales staff and craftsmen behind the brand was one of the most appealing aspects of shopping.

One attendee in London says he can spend hours in store when shopping “With online, it makes for a new suit or shoes, learning about the different tools and techniques being used. He described his Savile you more sure of your Row tailors as ‘friends’. “I’ve spent an entire afternoon with a shoemaker, just purchase, whereas if I because it’s amazing and I love seeing the quality and the methods and all of just go in store, I’ll often the detail behind it. Which you don’t see online because there isn’t that just buy something personal interaction.” Another attendee said that a personal relationship with [impulsively]. Whereas the staff would also make any future offers or sales more tempting – “if you if I’ve looked online I feel feel like they really know you, and know like I’ve thought about what you like.” Reverse showrooming it, I don’t have that sense Most of the attendees in all three cities of buyers’ remorse.” preferred to buy in-store rather than online, but used online as a valuable London research and discovery tool beforehand, whether that initial engagement was through search, email newsletters, or social media. The primary reason for this was the high price tag, which created more anxiety around getting it wrong in terms of quality or sizing. However, one attendee felt that online research was a valuable step in combating buyers’ remorse at a later stage. “With online, it makes you more sure of your purchase, whereas if I just go in store, I’ll often just buy something [impulsively]. Whereas if I’ve looked online I feel like I’ve thought about it, I don’t have that sense of buyers’ remorse.”

Where people were comfortable with shopping online was for repeat purchases, particularly for basics and lower priced items such as accessories or beauty products. “If I ﬁnd something I like I will then stick with it and buy it online,” said one woman at the London session. “If I was buying white t-shirts, it takes me forever to ﬁnd one that I like,’ said a man in the same group. “But then I’ll buy ten of them, and replace them with the same when needs be. But for the initial purchase, you have to be able to touch it.”

Online is mostly “ I love going on the internet as transactional, but I know what I want, I know the brands and I love the experience can be elevated in that some websites can provide to an experience me with. That is pretty much luxury experience, with an While all the attendees spent a lot experience in customer service.” of time researching future purchases Paris online, they were hard pressed to think of when they’d had a particularly Clever use of technology also helped enjoyable, emotive or memorable to make the online shopping experience experience. “All luxury brands have a more memorable. Several attendees very cold appearance online”, said one in London mentioned the use of Paris attendee, “while when you have video – Trish McEvoy was praised for a store experience you feel much more including ‘how-to’ clips for some of the pampered”. The London group agreed. more unusual products, removing any “There’s not much to try and get you in pre-purchase anxiety. However, there as a human’, Shelley says. “It’s more was cynicism about gimmicky uses of transactional.” The lack of personal or technology that did nothing for the experiential elements meant less of an customer experience. Overall, it was emotional engagement with individual felt the online experience was not yet brands; online search behaviour was there. One Paris attendee said that if more likely to be motivated by price or she had an issue with a luxury product, simply searching for a particular look “I wouldn’t think of writing an email, I or item. “With online you can type in would go in store. Because via email ‘shorts’ or ’t-shirts’ and you’ve got the I’ll get a standardised answer saying, whole range, you don’t need to walk ‘We’ll reply within 48 hours’. This to the different brands’, said a transition is not yet achieved.” London attendee.

Expectations were primarily around functionality and seamlessness rather than having an experience. “If I’m on a site, if there’s a lack of functionality there’s immediately going to be a bit of a turnoff’, says Ishbel (London). However it was possible to delight with exceptional service, whether that was prompt and attentive aftercare or surprising personal touches in the packaging and delivery. Several of the attendees had received handwritten or personalised notes when buying from smaller brands, which helped to break down some of the perceived barriers. And for the younger generation of luxury consumers, perceived coldness and standofﬁshness were a turnoff in an age of Instagram and brand personality.

Case study Sézane

While not strictly a luxury brand, Sézane was mentioned by several Parisian attendees because of the level of service and experience it provided. The ﬁrst French label to sell exclusively online, it also has an apartment which functions as a showroom and ﬁtting room for prospective customers. Returns and delivery are free, and only two collections are produced a year.

sezsane.com

“A very pretty package at home, with a note... that’s more personal already.” Paris

“Actually y your purch but as soon a a certain am buy in

“ When you travel you like to discover new things, you like to ﬁnd speciﬁc things in the country, as if it’s customised and you have something very special.” Paris

Case study Les Suites

A Parisian boutique comprising three individually designed apartments, or suites, where shoppers can spend hours with a stylist trying on a combination of haute couture, pret a porter and accessories from established and upcoming designers. The focus is on the social experience – visitors are encouraged to make themselves at home, and can either reserve a suite in advance or drop in at their convenience.

boutiquelessuites.com

Luxury consumers of the future of consumers Luxury value and so we want more from it. and so value store we want a And so if we are in because we only better experience, to get to the time have so much there.” store and spend in London Other attendees were likely to seek out different experiences when travelling abroad and in more of a ‘discovery’ frame of mind. “Unlike a lot of women said one. “When I’m not a big browser,’ I’m away I spend more time looking around because I’m in a different sort of want to see the same mood.” They didn’t products when travelling as they could get at home, which was one reason for seeking out lesser known local boutiques. Architecture could also be a point of attendee makes difference; one London a point of visiting the Aesop stores in each city she visits, as she knows they’re designed by a different architect. A desire to see some authentic local as well. identity was raised in Paris “When I go to Shanghai and I see feel Chanel, Gucci...I don’t Vuitton, like shopping there at all. Because I have exactly the same selection and I would expect some products in Paris. were drawn with localisation.” Parallels who offered a the Gagosian gallery, limited edition artist sketch to dedicated art fans who had visited an exhibition at every gallery around the world. “ We hold our spare time in higher in hold our spare time We “ Twitter Twitter riencing about hunt on with a useful, expert -driven attempts to give © 2015 CBRE, Ltd There were also opportunities for the shoppers to be actively engaged by a brand, rather than passively expe In Paris, home-like spaces were not In Paris, expressly celebrated, although attendees noticed the impact of spaces that were comfortable and inviting rather than clinical and cold on the overall experience. “There’s somehow a discretion aspect they were “Once said one. [at Lanvin]’, called salons because you would feel good going inside, it was a place where you would be happy and make yourself comfortable.” The effect was lessened at brand concessions in department stores. have this kind One man said “you don’t of physical reassurance that you have in the universe of the brand when you’re in the same way.” attendees it in-store.mentioned London the Jimmy Choo treasure The trend for home-like retail design experience, and was felt to add to the in London was popular with attendees Smith like Paul who described stores and Anthropologie as great examples of having a brand’s unique personality for example, “Say, reflected in the decor. got a bookcase with different you’ve books and there’s music playing that represents the brand, and there’s so many conduits through which they can express themselves, as opposed to in a traditional store.” While the younger attendees saw marked differences within the Millennial within the saw marked differences younger attendees While the media, engage on social to share and in terms of willingness generation the luxury a key part of that experiences were all in agreement they were feel part of a They wanted to in brand loyalty. encounter and factor there were other Service is one element of this, but community or tribe. more than pure how brands might offer something examples given of product. as a memorable and exciting way to find find to as a memorable and exciting way product, and were very positive Nike’s community customers back to “Even source of support and activity. from just going to a few [classes in store] I feel so loyal to the brand.” Meaningful investments became lessofaconsideration. or experiencewasmeaningful, price a personalityquiz.”Whenpurchase of thesalespersonto“almostgiveme known brandsandtrustingtheexpertise scent, specificallyseekingoutlesser spoke aboutthesearchforhersignature mentioned bythegroups.Oneperson Luxury fragrancewasanotherproduct wall thananexpensivesofa,”shesaid. much ratherhaveapieceofartonmy the historyandcraftbehindit:“Iwould when travelling, afterbeingseducedby decoration budgetonaVenetian mask recently spentalmostathirdofher One youngerLondon attendeehad not whatitsaysaboutitself.” attendee, “abrandiswhatitdoes, saidoneMilan the endofday”, in customer-facing environments.“At its valuesbehindthescenesaswell consistency inhowthebrandexpressed was alsoadesirefortransparencyand purpose intheeyesofgroup.There produced withgreatermeaningand the founders”.Thisimbuedgoods “a visionary, pioneercomponentfrom described byoneParisian attendeeas had astrongpersonalityincommon, big brandsthatretainedtheirauraall something wasconsideredluxury. The were increasinglyirrelevantinwhether with Sézane.Thelabelorpricetag the experiencessurroundingit,as quality, authenticityandcraft,orin product itself, intermsofrareness, they lookedformeaningeitherinthe handing downtothenextgeneration, the groupwerelesslikelytoconsider Because theyoungermembersof however, isnotbuyingacoatthatwilllast30years.Iliketochange.” “luxury Fortransmit, keep,tellstoriesabout”. theyoungermembersofgroup, in time,thathasawholehistorysurroundingitandwemightbeableto their collection,describingthepleasureofhaving“aniceobjectthatwilllast of theolderParisians spoke aboutthepleasureofaddingluxuryitemsto not asmuchapartofpurchaseconsiderationwithyoungerbuyers.Some orbrand’svalue,butwas campaign –enhancedperceptionsofanobject’s an ownerofheirloomforthenextgeneration–asinPatek Phillippe differences wereseen.Theideathatyoumightbeacaretakerratherthan Paris andLondon, althoughthisisoneofthefewareaswheregenerational The ongoingrelevanceofheritageandtimelessnesswerediscussedinboth Luxury consumers ofthefuture – 26 – “I wouldn’t interactwithanyofthat.” digitally-enabled fittingroomconcept. everything”, saidoneLondoner ofthe ten screensandcamerasbroadcasting salesperson andthereisn’t goingtobe any interruptionsandIcantrustthe a sanctuarywheretherewon’t be retail environment.“I’mlookingfor their purchases,orinaphysical where theypreferrednottobroadcast several attendees–whetheronline, media. Discretionwasimportantto interacting withbrandsonsocial However, notallattendeesenjoyed and washappytoberetweeted. Mugler account,“totryandgetitgoing”, vintage jacketpurchasetotheThierry One maninLondon hadtweeteda communication thanacontentchannel. mentioned, butthiswasseenasmoreofa want tomissout.”Twitter wasalso want anyoneelsetohavethem.Ididn’t them ontheplatform.“Ididn’t really the HarveyNicholswebsiteafterseeing limited editionpairoftrainersfrom fashion. Anotherhadpurchaseda magazines asaplatformforluxury felt thesocialnetworkhadreplaced in touchwithabrand.OneLondoner their preferredchannelforkeeping were activeonInstagram,whichwas Most oftheyoungergroupmembers sanctuary Sharing vs seeking © 2015 CBRE, Ltd © 2015CBRE,

Luxury consumers of the future

The other impact of the availability of digital knowledge mentioned by the groups was the enforced transparency brands now faced, allowing consumers to check everything from whether they’re authentic to the ethics of their supply chain. This had impacted brand loyalty for some of the attendees. “Today, with social networks, the customer will not spend such an amount of money without knowing how it’s made and what it is”, said one Parisian. Similarly, in London, one member said they no longer bought a particular luxury brand because “I know how it’s made, I know where it’s made... I don’t think it’s value for money. Unless you go into the shop and have that whole trunk experience, something bespoke.”

This increased transparency also led attendees to question the shifting role of the shop and staff. Before the digital era, the store was the “temple of knowledge, and the sales person was the warden of this knowledge. Today one can get the knowledge anywhere – what is the new experience and sales ceremony?”, asked a Parisian attendee.

Case study Provenance

Provenance is a platform that allows brands to tell the story of their heritage and supply chain, and have it authenticated “ I think there’s a movement using the technology that powers digital from young people that are currency Bitcoin (blockchain technology). It reﬂects the millennial mindset that going away from great luxury “To know the origins and journey of brands in Paris or Italy towards a product is to understand its value.” less famous brands for quality, provenance.org for values, for transparency, for authenticity...All those things they don’t ﬁnd anymore in brands that are becoming bling-bling and less luxury.” Paris

“The ﬁrst time it might be more reassuring to have both the human contact and the touch. But I like digital services that can be brought to me, because what I hate is to go to a store, and [ﬁnd the goods I’m looking for] are not there.” London

“ I’m looking for a sanctuary where there won’t be any interruptions and I can trust the salesperson and there isn’t going to be ten screens and cameras broadcasting everything. I wouldn’t interact with any of that.” London

Where next?

One Parisian attendee had the idea for an online concierge service: “I want to buy a Chanel bag and somebody calls me to make an appointment and comes up with the bags, shows them to me”. Several others in the group had already tried and praised new delivery service Igloo for successfully bringing the service element to an otherwise purely transactional experience.

The overall takeaway from attendees, many of whom worked in luxury or associated industries, was that the future lay in a blended retail model, which would bring the human factor to Case study online without losing the experiential aspects made possible by having a Igloo physical space. Any solutions, it was agreed, should be driven by a ruthless focus on exceptional service. A French app which will deliver between ﬁve and ten items of clothing for you to try on at home, at a cost of 1 Euro – even if you send everything back. Anything the customer decides to keep is debited from their smartphone via the app, anything they don’t want is collected by the same driver the next day at a convenient time for them. Around 60 mid-range and premium brands are currently offering the service.

goodigloo.com

L P A P U R E X O G R U F L S R I O P Y L B E I A C N L T G I V E

LAGOS NIGERIA

The island and the mainland regions

Ojodu

Ikeja

The inception of the formal retail market in Nigeria took place over 10 years ago through the development of KOSOFE the country’s flagship shopping centre, The Palms Lekki in Lagos. This rapidly growing city is the commercial capital of Africa’s largest economy, home Ofin to over two thirds of the country’s economic activity, doubling as a hub for leisure and retail activities. Prior to Lagos the opening of The Palms, the average Lagosian did their shopping through informal street markets and small shopping plazas scattered across the city. Those who could afford it, travelled to Dubai, London, Johannesburg and New York to cater to their retail needs.

Zegna Lagos Island Alara Victoria Island Modan

Polo

The Palms, Lekki

Ikeja City Mall

BoConcept

The island region

Zegna

Alara

Modan

Polo

The Palms, Lekki

BoConcept

Lagos Island

Victoria Island

Atlas Beach

As of Q3 2015, for every 200 people in streets’ or in boutique hotels in Victoria The consumer base for these brands is Lagos only one sq m of formal retail space Island and Ikoyi. Even though brands like usually limited to wealthy Nigerians. The was available, a stark statistic considering Hugo Boss, Tommy Hilfiger and Lacoste tourist industry is almost entirely confined that there is roughly one sq m of retail are thriving in shopping malls, this model to business tourism, hence Lagos is not a space for every person in Johannesburg. is not typical for the few upmarket/luxury typical retail destination in an African or retailers present in Lagos. even West African context. Many of the This large deficit, together with rapid consumers of luxury retail in Lagos have urbanisation rates and a population that is Existing brands in the city include Mango, visited these brands in other cities, such as over 17 million strong, has since attracted Levi’s, TM Lewin, Nike and Swatch. Others London, Dubai and Johannesburg, while a number of local and international such as Pandora, Adidas, Celio, Jack & the others are interested in acquiring pieces investors keen on providing formal retail Jones, M.A.C Cosmetics, black|Up, Anne they’ve seen on television, movies and in this growing city. Though some investors Klein and the aforementioned Hugo Boss, in magazines. are looking further afield into second Tommy Hilfiger and Lacoste only entered tier cities, Lagos is still a major focus the market in the past two years. As the for investors keen on relevance in the available brand portfolio demonstrates, Nigerian retail growth story. Despite the the variety of luxury retailers in Lagos is growing pipeline of retail space in the city, limited; however there is growing interest more investors are still intent on entering from a long list of global luxury brands to the market, even if other retail projects enter the market. are in close proximity. The typical mode of entry for these retailers The luxury retail market in Lagos has is through franchisees, over 90% of whom also seen some growth, however not as are Nigerian. Persianas Retail and Smart rapid as the overall retail market. Given Mark are among the franchisors with the the overall low income demographic in largest brand portfolio present in Nigeria. Nigeria, many retailers in shopping malls Persianas Retail portfolio includes the likes cater to the mid-low income segments. As of Max, Hugo Boss, Inglot, Puma, Lacoste a result, brands like Ermenegildo Zegna, and Hackett. On the other hand, Smart BoConcept and official resellers such as Mark’s portfolio includes Swatch, Levi’s, Modan, Polo and Alara typically opt for Converse, TM Lewin, Nike, Tommy Hilfiger, stand-alone retail units on emerging ‘high Thomas Pink and Hamleys.

NEW YORK USA

Home to an enormous office community, as well as year-round tourism, Fifth Avenue from 42nd to 59th Street is one of the most expensive and sought-after retail destinations Often described as the economic and in the world, offering an unprecedented cultural hub of the United States, branding opportunity to display prestigious Manhattan is home to some of the global brands in museum-like storefronts. most exclusive real estate in the world. Anchored by the luxury department stores A booming office, residential and tourist Saks Fifth Avenue, Bergdorf Goodman, Hudson Yards, occupying 250,000-sq. ft. community, has made the island an ideal and Henri Bendel, the retailers here on 10th Avenue between 31st and 32nd location for luxury retailers to set up attract a swarm of shoppers consisting of Streets. A handful of luxury retailers have shop. Upper Madison Avenue, the Plaza international and national tourists, local also debuted at Brookfield Place this past District around Fifth Avenue and SoHo employees, Manhattan locals and wealthy spring, including the likes of Burberry, are some of the most prominent retail suburban residents. Gucci and Salvatore Ferragamo. markets in the world, with asking rents ranging from $900 to $3,800 per sq. ft. SoHo, previously an art district known for Rents have grown aggressively over the its lofts and galleries, has transformed into past five years and sales volumes have Upper Madison Avenue, characterised a mecca for boutiques and fast-fashion failed to keep pace, causing an increase in by an exclusive, elegant environment, retailers. The innate fashion-forward and availabilities and the length of time needed features a diverse mix of the finest luxury trendy characteristics brought by the artist for leases to close. Rent growth will likely brands, situated in brownstones or population from years prior, make the taper from what has occurred most recently limestone French Renaissance Revival area a popular tourist destination that as these submarkets continue to witness townhouses originally built as private also satisfies those seeking beautifully fewer lease transactions. homes. These retail townhouses are detailed architecture and trendy retail. integrated into the residential community The neighbourhood’s appeal resides in and cater to Upper East Side residents in its capacity to provide a unique shopping addition to Manhattan locals, residents experience that attracts a high volume from the suburbs and European tourists. of international tourism as well as local, The stretch of Madison Avenue between affluent shoppers. The SoHo retail market 57th and 72nd Streets, which provides 15 differs from Upper Madison and Fifth contiguous blocks of retail, is considered Avenues because it includes mass market, one of the most prestigious shopping teen, and fast-fashion retail as well as corridors in Manhattan, home to luxury luxury tenants. Prince and Spring streets and aspirational luxury retailers such as are the most prominent luxury corridors Ralph Lauren, Bottega Veneta, Fendi, Pucci, within SoHo and are home to retailers Valentino and Barney’s. such as Coach, Moncler, Prada, Theory and Longchamp. The Plaza District is conveniently located, with easy access to almost every subway Although these districts are the home line including Grand Central Station. This base for luxury retail in Manhattan, new corridor is one of the most densely populated developments at the perimeter of the districts in the city and is anchored by island are also starting to attract luxury internationally renowned sites such as St. retailers. For example, Neiman Marcus Patrick’s Cathedral and Rockefeller Center. will open its first Manhattan store at

Luxury zones in Manhattan Consumer proﬁles Upper Madison Avenue – Wealthy Upper East Side residents, Manhattan locals, Upper residents in the suburbs of NYC and Broadway European tourists.

Brands – luxury/aspirational luxury. Plaza District – International and national tourists, local employees, wealthy Manhattan locals/residents as well as those from the Central suburbs. Grand Central Terminal, which is Park nearby, has direct links to wealthy suburbs Upper Upper in southern New York State (Westchester West Side East Side County) and Connecticut (Greenwich, Cos Cob, and Westport). Upper Madison Brands – Fifth Ave (42nd-49th): mass Avenue market, fast fashion, lifestyle; Fifth Ave (49th-59th): luxury.

SoHo – Attracts a high volume Columbus Rockefeller Plaza District of international tourism as well Circle Centre as local shoppers.

Midtown Times Midtown Brands – luxury, mass market, teen retail, West Square Grand East fast fashion. Central

Penn Plaza/ Herald Square Park Avenue Madison South Chelsea Square Gramercy Flatiron/ Union Square

14th Street East Meatpacking District Village Greenwich Village Noho

Nolita Lower Hudson Soho Square East Side Little Italy/ Chinatown Tribeca

World City Hall Financial Centre

Wall Street/ Financial

MUMBAI INDIA

Mumbai has not only established Ermenegildo Zegna, Versace, Jimmy Choo, itself as the financial capital of India, Bottega Veneta, Mont Blanc, Burberry, but is also amongst the world’s Emporio Armani, Hugo Boss, Canali, leading financial centres. A changing Gucci and Hermes. Approximately 13% demographic profile, flourishing of the total brands that entered and services sector, home to the Indian Film expanded in Mumbai during 2012 to H2 Industry, and an increase in disposable 2015 were in the luxury segment. In 2015 incomes, has led to the prominence of itself, the city has witnessed store openings Mumbai as a key retail destination in by at least six luxury retailers such as the country. Owing to the substantial Montegrappa, BCBGMAXAZRIA and presence of upper middle class, High Judith Leiber Couture amongst others. Net Worth Individuals (HNWI’s), foreign tourist influx as well as the Traditionally, luxury retail activity in the diplomat and expatriate population, the city was characterised by the presence of city has emerged as one of the leading large stand-alone stores, or space take-up hubs of luxury-retailing in the country. by brands in prominent five star hotels in the city, such as Grand Hyatt, The Taj Mumbai is currently home to leading Mahal Palace and The Oberoi targeting luxury brands, some of them having the expatriate/elite class frequenting these multiple outlets across the city. Prominent hotels. However, this space take up by luxury retailers that have forayed into retailers in hotels was largely on account the city over the last few years include of a lack of quality space elsewhere in Louis Vuitton, Dior, Salvatore Ferragamo, the city. Increased exposure of the city’s

Mumbai centre

Mumbai Railway Network Thane District Presence of Luxury Retail

Prominent High Streets Borivali

Sanjay Gandhi National Park

Malad

Thane

Goregoon

Airoli

Vikhroli

Navi Andheri Mumbai CSIA Ghansoli Ghatkopar

Khopar Kurla Bandra Khairane Terminus

Nerul Dadar

Central Proposed Mumbai International Airport

Churchgate South Mumbai

well-heeled to global trends and the Most of these retailers have opted to Kurla Complex area of Mumbai are likely growing interest of luxury retailers to set up operate via a joint venture or franchisee to ease the pressure in the medium-long base in Mumbai, demanded a ‘dedicated’ route as these brands tend to draw comfort term. Also, as a significant proportion of place for luxury retailers – resulting in the from the presence of a local partner to the target population still purchases luxury emergence of Palladium at Lower Parel manoeuvre the ‘not so simple’ stipulations/ goods on their visits abroad due to – a high end/luxury retail mall. The regulations of store operations in India. competitive pricing and service, localisation development allowed luxury retailers and consumer connect remains the key such as Canali and Zegna amongst others, As disposable incomes rise and luxury to tap the Indian luxury customer. to relook at their operation/expansion consumer base broadens (the younger strategy and shift base from five star hotels population is more willing to spend money to the mall in order to tap the higher on luxury goods), the city will continue to footfalls, better brand visibility and ambient remain on the radar of prominent luxury facilities. In the recent past, brands such as retailers planning an expansion or entry the Italian luxury writing instrument retailer into the country. However, some impediments Montegrappa, Bobbi Brown, accessories to growth, such as formidable real estate retailer S.T Dupont, Hugo Boss, Paul Smith, costs and high import duties (especially in TUMI, Canali, Burberry, Gucci and Bottega comparison to Asian and Middle Eastern Veneta have either expanded their presence counterparts), will still remain. While the in the country with a store at the Palladium current dearth of luxury mall developments or opened their first outlet in India at or suitable high-street options is likely the Palladium. to result in rental values in the existing luxury malls to further increase, however, two luxury malls planned in the Bandra

R E TAILERS PERFOR M A N

Understanding retailers’ behaviour is instrumental in our ability to advise our clients. Therefore CBRE conducts a number of projects each year to track the movement of C retailers. Through our analysis we have been able to identify the markets which luxury retailers targeted in 2014 for new store expansion, as well as the markets luxury brands are targeting this year. Our ongoing monitoring of diﬀerent brands and their footprints, also allows us to highlight the top markets for luxury brand presence. E

TOP TARGET MARKETS FOR LUXURY BRANDS

Figure 1: Number of new Luxury & Business Fashion brands that opened a store in 2014.

Beijing 12

Singapore 12

Toronto 11

Tokyo 10

Hong Kong 10

Copenhagen 9

Istanbul 9

Doha 9

Bangkok 7

Manila 6

Brisbane 6

Taipei 6

Abu Dhabi 6

Source: CBRE 2015

TOP TARGET MARKETS FOR LUXURY BRANDS EXPANSION

Figure 2: Percentage of Luxury & Business Fashion brands targeting the market in 2015.

69%

China

62% 46%

Hong Kong South Korea

46% 38% 38%

Germany Japan France

31%23% 23% 23%

United Kingdom United States Singapore Taiwan

Source: CBRE 2015

WORLD’S MOST LUXURIOUS CITIES

Figure 3: Ranking of cities by presence of luxury brands.

No. Ranking of cities with luxury brands Up/down/level from previous year‘s %

United Arab United China Hong Kong 1 2 Emirates 2 Kingdom 4 87% 83% 83% 81% Shanghai Dubai London Hong Kong

Up from 83% in 2013 Level with 83% in 2013 Level with 83% in 2013 Level with 81% in 2013

7 Taiwan 7 Russia 9 China 11 France 73% 73% 71% 71% Taipei Moscow Beijing Paris

Level with 73% in 2013 Level with 73% in 2013 Up from 69% in 2013 Level with 71% in 2013

United States Italy Japan Japan 14 14 19 20 of America 67% 67% 65% 63% Milan Nagoya Kobe Los Angeles

Level with 67% in 2013 Level with 67% in 2013 Up from 63% in 2013 Level with 63% in 2013

United States Italy Spain Indonesia 25 25 25 28 of America 60% 60% 60% 58% Rome Madrid Jakarta Houston

Level with 60% in 2013 Level with 60% in 2013 Level with 60% in 2013 Level with 58% in 2013

Source: CBRE 2015

United States Japan Singapore Japan 5 6 7 of America 7 79% 75% 73% 73% Tokyo Singapore New York Osaka

Level with 79% in 2013 Up from 73% in 2013 Level with 73% in 2013 Level with 73% in 2013

United States South Korea China Taiwan 13 14 of America 14 14 69% 67% 67% 67% Seoul Las Vegas Chengdu Taichung

Level with 69% in 2013 Up from 65% in 2013 Up from 65% in 2013 Level with 67% in 2013

20 Malaysia 20 Taiwan 20 Thailand 24 Turkey 63% 63% 63% 62% Kuala Lumpur Kaohsiung Bangkok Istanbul

Level with 63% in 2013 Level with 63% in 2013 Up from 62% in 2013 Level with 62% in 2013

28 China 28 South Korea 58% 58% Shenzhen Busan

Up from 56% in 2013 Level with 58% in 2013

RETAILERS’ PERFORMANCE VITAL STATISTICS

Western Europe North America

Growth % Growth % (2012-2014) (2012-2014) Sales +13.4% Sales +4.9% Number of sites +15.6% Number of sites -2.2% Selling space -2.0% Selling space +0.1% Average sq/m per site -15.2% Average sq/m per site +2.3% Average sales per sq/m +15.7% Average sales per sq/m +4.8%

Asia Latin America — Azerbaijan — Brazil — China — Chile — Hong Kong — Mexico Latin America — India — Indonesia Middle East — Japan and Africa — Kazakhstan — South Africa — Malaysia — UAE GrowthGrowth % — Phillippines (2012-2014)(2012-2014) — Singapore North America — South Korea — Canada SalesS le ++7.0%7.0% — Taiwan — USA — Thailand NumberNuumbbe ofo sitessits ess +6.8% — Uzbekistan Western Europe — Vietnam — Austria SellingS lling spacespaspacee ++7.7%7.7% — Belgium Australasia — Denmark AverageAveraerage sq/msq/sqq/m per site ++0.9%0.9% — Australia — Finland AverageAveraerage sasalessales perper sq/msq/m -0.6% — New Zealand — France — Germany Eastern Europe — Greece — Croatia — Ireland — Czech Republic — Italy — Estonia — Netherlands — Georgia — Norway — Hungary — Portugal — Latvia — Spain — Lithuania — Sweden — Poland — Switzerland — Romania — Turkey — Russia — UK — Serbia — Slovakia — Ukraine *Based on USD ﬁgures.

Eastern Europe

Growth % (2012-2014) Sales +18.0% Number of sites +13.0% Asia Selling space +9.0% Average sq/m per site -3.6%

Average sales per sq/m +8.2% Growth % (2012-2014) Sales -4.1% Middle East and Africa Number of sites +14.9% Selling space -2.5% Average sq/m per site -15.1% Growth % Average sales per sq/m -1.6% (2012-2014) Sales +25.9% Number of sites +26.1% Selling space +11.8% Average sq/m per site -11.3% Average sales per sq/m +12.6% Australasia

Growth % (2012-2014) Sales +0.7% Number of sites +16.0% Selling space +15.1% Average sq/m per site -0.8% Average sales per sq/m -12.6%

Source: Euromonitor 2015

The impact of the global economy on luxury consumption is worthy of deep consideration. A luxury consumer is in many instances a global consumer; therefore it is key that we have an understanding of any elements that may change their consumption patterns. As the importance of different countries’ consumers develop we have to look at the market in a different way. What is it that drives behaviour? What do they look for from luxury brands? Where do they shop? We need to understand the building blocks that make up their luxury DNA. If we have this knowledge, we can adapt to movements in the global economy and the resultant impact on consumer behaviour.

As discussed throughout the report, the luxury consumer resides in many different cities across the globe, the traditional markets in Europe of London, Paris and Milan, the highly penetrated market of New York on the East Coast of the USA, the developing markets in Mumbai and the nascent luxury city of Lagos. The needs of luxury consumers are developing and it is not enough to simply replicate the same model city by city. Each consumer is unique and each brand has a responsibility to understand what drives consumers to make a purchase.

As we’ve seen in the report, the penetration levels of luxury are increasing. Cities from across Asia are moving ahead of more established markets in Europe and the USA. We will see those cities joined by the likes of Lagos, Addis Ababa, Panama City and Astana, all of which are seeing a dramatic growth in Ultra High Net Worth Individuals and are experiencing spikes in consumer demand. Some of these consumers will, of course, visit and shop overseas, but many will also want the opportunity to shop closer to home. Therefore, as a brand are you comfortable that you have the right depth of understanding of the Kazak market? Do you know what brands consumers favour in Ethiopia? These are questions that need to be addressed in order to expand in the most effective manner.

The future of luxury will be driven Innovation Access by a number of factors Luxury items tend to be either those The physical store network is the core basis that have a heritage and authenticity of the luxury retail industry. Consumers prefer The continued aspiration to or those that are at the cutting edge of to shop in stores, they like the experience partake of a luxury lifestyle technological development. There is a and they are buying this as much as the The desire of individuals to purchase luxury reason why there is a waiting list for every product. However, it is remiss of luxury products is fundamental to the continued new Ferrari that comes off the production retailers to ignore the possibilities offered growth of this industry. The current view is line; it is in the brand heritage, but also by the online channel. This is a route to that there is no likelihood that this desire in the technology and development consumers, it is a path that they take when will lessen in the near future. For all the talk that has gone into the new model. The reviewing and looking for product. With the of leading a simpler lifestyle, free of material queues outside certain technology stores website creativity that is currently available possessions, there are still a growing number when a new model phone is released to brands it is foolish not to take advantage of people who aspire to access a lifestyle are testament to this as well. There are a and to have a standout site. founded in luxury. number of devices that will offer the ‘same’ functionality but it is the heritage of this Global economic factors brand and the innovation that pushes it There are very few occasions where changes high on any luxury scale. have a global effect. Interestingly changes in the ‘global’ economy tend to have local impacts, but even when they do occur on a truly global scale, it does not tend to happen in each market at the same time. When there is a downturn in one market it often creates opportunities in the next.

What do brands need to do to Understand the new consumer Embrace technology remain relevant in the eyes of The needs of consumers in developing As discussed previously, the online the luxury consumer? markets are different: an expectation opportunity is not one to be ignored; that one approach works for all is it goes further than having a beautiful, Avoid complacency not appropriate. The brands that are transactional website though. It is to do with We often hear brands reinventing themselves recognised as leaders may, for one reason how technology is addressed in the physical and, while this is to be applauded, it perhaps or another, simply not resonate in a new environment; it’s about using technology would not be necessary if the brand had market with a new consumer. Whilst to facilitate the best possible lighting in the focused on continuous innovation. The some consumers want restrained and fitting room; it’s how ultra-high definition brands that the consumers favour today understated, others are very much looking screens can take the place of mirrors; its will change, new brands will come to the for a symbol of conspicuous consumption. about the ability of the sales associate fore and others will fade away. It is those to show you the range on their tablet. that innovate and develop that remain It’s all about the experience Technology has to be seen as an ‘enabler’, relevant and grow. Shopping for luxury items deserves to take but it has huge opportunities in the luxury place in a luxury environment and to be industry to facilitate sales and enhance the Understand the market an experience. The experience of being shopping experience. This isn’t to suggest that brands don’t greeted and being shown the product, the understand the market in which they operate. chance to look at other items; the whole Luxury is a lifestyle decision; The role of This is a reflection of the changing markets, journey down to the packaging and the the luxury brands is to guide the consumer the cities in countries that previously haven’t shopping bag given to carry your item in their decision making and the consumer been targeted: the best route to market, the home where you carefully unwrap it and must be educated to understand the ethos potential partners, the best retail locations gaze upon its beauty. All these elements behind the brand. A greater knowledge and operating practices – each market make the luxury purchase about more of the brand will lead to deeper levels of differs in all of those elements. than just an item. engagement and loyalty which will result in more money being spent.

KEY CONTACTS For more information about this report, please contact:

Andrew Phipps Natasha Patel Executive Director Associate Director EMEA Research and Consulting EMEA Research t:+44 207 182 2116 t: +44 207 182 3166 e: [email protected] e: [email protected]

Global Retail Global Research Leadership

Anthony Buono Nick Axford, Ph.D The Americas Global Head of Research t: +1 619 6968302 t: +44 207 182 2876 e: [email protected] e: [email protected]

Peter Gold Richard Barkham Ph.D Europe, Middle East and Africa Global Chief Economist (EMEA) t: +44 207 182 2665 t: +44 20 7182 2969 e: [email protected] e: [email protected] Neil Blake, Ph.D Alistair Palmer Head of Research, EMEA Paciﬁc t: +44 207 182 2133 t: +61 2 9333 3396 e: [email protected] e: [email protected] Follow Neil on Twitter: @NeilBlake123

Joel Stephen Henry Chin, Ph.D Asia Head of Research, Asia Paciﬁc t: +852 2820 2803 t: +852 2820 8160 e: [email protected] e: [email protected] Follow Henry on Twitter: @HenryChinPhD

Spencer Levy Head of Research, Americas t: +1 617 9125236 e: [email protected] Follow Spencer on Twitter: @SpencerGLevy

To learn more about CBRE research, please go to www.cbre.com/researchgateway

CBRE Disclaimer 2015

CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

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